Mergers & Acquisitions: The Way of Beverage Distributors in 2016
Having been a resident of Las Vegas for the past five years, when I think of mergers and acquisitions, I think of the hotel industry. Major events such as MGM Resorts International purchasing the Borgata Hotel Casino & Spa, Red Rock Resorts, Inc. acquiring Palms Casino, and the Las Vegas Convention and Visitors Authority purchasing the Riviera Hotel are what come to mind in recent years.
When it comes to the beverage industry, since entering the food and beverage field in Las Vegas in 2011, I quickly learned about a couple of the major players in the state: Southern Wine and Spirits and Wirtz Beverage Group also known as Wirtz Beverage Nevada. Now, five years later, as of January 2016, both companies have re-emerged as Southern Glazer’s Wine & Spirits and Breakthru Beverage Group, respectively. It looks as though beverage company mergers are a growing trend in the past couple years, with Nevada being no exception. This month, I am taking the time to recap the details of both mergers, as the nation’s beverage industry is definitely affected in many ways.
Southern Glazer’s Wine and Spirits
Formerly Southern Wine and Spirits
If you are even remotely in the beverage industry, you know Southern Wine and Spirits. Despite Wirtz Beverage having now merged to become the second largest distributor in the nation, Southern still rises above as the largest beverage wholesaler, and now has become even stronger with the merger with Glazer’s based in Dallas. The major benefit of the Southern and Glazer merger was the increase in distribution footprint. Together, the now Miami-based Southern Glazer’s Wine and Spirits spans 41 of our 50 states, in addition to Canada, the District of Columbia and the Caribbean. If it wasn’t the largest beverage distributor, it surely is now, from coast to coast and beyond! With this alliance, Southern Glazer will now “distribute more than 150 million cases of wine and spirits annually, [and] cover nearly 90% of the legal drinking age LDA population in the U.S.” 1
Breakthru Beverage Group
Formerly Wirtz Beverage Group
This Chicago-based beverage distributor, owned by Rocky Wirtz, ranked sixth in distribution sales. A partnership was formed with New York-based distributor, Charmer Sunbelt Group, which ranked third. This merger resulted in a new company called Breakthru Beverage Group based in New York which will form the second largest beverage distributor in the United States. Initially, Breakthru Beverage will distribute to 16 markets, which significantly increases the market share of the former Wirtz Beverage Group. 2
So why the increase in mergers, and what does this mean for the beverage industry as a whole? The ultimate goal of many large distributors is to increase market share that spans across the nation. Due to strict legal limitations making it difficult to enter new states, a merger essentially makes it happen because both companies are already legally in several states. It is all about strategy, as there was very few states overlapped in distribution between Southern Wine & Spirits and Glazer’s. The increase in distribution size equals increased marketshare, and leads to increased efficiencies. For the wine producers, this means that their product can reach several markets without having to partner with different distributors in different states. In Nevada’s F&B industry, this means that wine outlets and restaurants will have a much larger portfolio to choose from.
Partnerships and consolidation of beverage distributors means new opportunities and the evolution of the industry. It already exists in other hospitality industries, like hotels, restaurants, airlines, etc., so don’t expect this trend to die down anytime soon. I am excited to see what evolutions take place in the beverage in years to come!
Until next month, Cheers~